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The ITAT Bangalore held that where incriminating documents relating to an assessee are found during a search conducted on another person, the assessment must be framed under Section 153C and not under Section 143(3).
The alleged unexplained investment was based only on third-party statements and seized digital data. In absence of receipts, confirmations, or admission by the assessee, the addition of ₹50 lakh was deleted.
It was ruled that approval under Section 151 granted mechanically, with contradictory stands taken by the authority, vitiates the reopening. The reassessment was set aside for lack of proper application of mind.
The Tribunal noted that the AO reopened the case under the mistaken belief that no scrutiny assessment had been made. Such factual error and absence of new incriminating material vitiated the assumption of jurisdiction under Section 147.
ITAT deleted the addition made under Section 153C as no incriminating material directly linked the buyer to alleged cash payments. Reliance solely on third-party pen drive data and statements was held insufficient.
ITAT held that the Assessing Officer failed to record proper satisfaction linking seized material to the assessee’s income. Consequently, proceedings under Section 153C were quashed.
ITAT upheld deletion of additions where assessment was framed under the wrong provision. Since the year fell within the block period of a non-searched person, Section 153C was mandatory.
ITAT held that Excel sheets recovered from a third party cannot justify addition without direct evidence linking the assessee. In absence of corroboration and cross-examination, the cash investment addition was deleted.
The Tribunal held that amounts reflected in regular books and disclosed in returns before search cannot be treated as unexplained expenditure. Section 69C was found inapplicable as no out-of-books spending was established.
The Tribunal held that additions under Section 69 cannot be sustained when based solely on third-party statements and unverified electronic data without independent corroboration or cross-examination.
